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Oil prices are recorded at a three-month low of $71.61 a barrel after the US Department of  Energy announced US stockpiles had risen by 1.9 million barrels, double the amount predicted earlier. Demand has not yet caught up with this sudden supply. Investors are speculating that fuel consumption will decrease in response to the European crisis.

It is also likely that this low is due to the ECB’s decision to buy foreign bonds, which artificially caused oil prices to rise last week from $75.11 to $76.80 a barrel.  Phil Flynn, a senior market analyst at PFG Best, likened this move to the equivalent of giving the market a shot of heroin , explaining that one the high wears off, the problem still remains.

The Euro also reached its lowest point ($1.28) against the dollar since 2008, causing prices of oil to fall. In intraday trading prices fell below $70 a barrel, prompting market analysts to predict that prices may continue to fall. If prices do fall below $70 a barrel, OPEC may cut production to keep prices steady.

Gold Prices for Last 10 Years (Google Chart)

In the last 10 years,  gold has risen steadily (see chart on side), breaking an all-time previous high of $1,241 an ounce on May 12. Due to the Greek crisis, foreign investors are cautious about investing in the Euro and prefer to invest in the seemingly more stable commodity of gold.

The price of gold, like other commodities is affected by demand and supply. However, since the total amount of gold in the world is already mined and currently in existence, the price of gold is affected more by demand than other commodities. For the right price, market suppliers can sell gold in the marketplace.

But the sudden growth in demand for gold could also contribute to global inflation, especially in light of the current global crisis and the European Central’s bank’s surprising decision to buy bonds of weak government economies. Investors are currently speculating as to whether gold will continue to rise, or if it truly did hit the breaking point on Wednesday.

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